Posts Tagged ‘Apple Computer’

Neil Irwin of the New York Times wrote a good article about Eastman Kodak, Apple Computer and how the economy has changed for working people.

Gail Evans and Marta Ramos have one thing in common: They have each cleaned offices for one of the most innovative, profitable and all-around successful companies in the United States.

For Ms. Evans, that meant being a janitor in Building 326 at Eastman Kodak’s campus in Rochester in the early 1980s. For Ms. Ramos, that means cleaning at Apple’s headquarters in Cupertino, Calif., in the present day. [snip]

The $16.60 per hour Ms. Ramos earns as a janitor at Apple works out to about the same in inflation-adjusted terms as what Ms. Evans earned 35 years ago. But that’s where the similarities end.

Ms. Evans was a full-time employee of Kodak. She received more than four weeks of paid vacation per year, reimbursement of some tuition costs to go to college part time, and a bonus payment every March. When the facility she cleaned was shut down, the company found another job for her: cutting film.

Ms. Ramos is an employee of a contractor that Apple uses to keep its facilities clean. She hasn’t taken a vacation in years, because she can’t afford the lost wages. Going back to school is similarly out of reach. There are certainly no bonuses, nor even a remote possibility of being transferred to some other role at Apple.

There are five Internet companies—Apple, Google, Microsoft, Amazon and Facebook. Together they have a market capitalization just under 3 trillion dollars.

Bruce Schneier has called this arrangement the feudal Internet. Part of this concentration is due to network effects, but a lot of it is driven by the problem of security. If you want to work online with any measure of convenience and safety, you must choose a feudal lord who is big enough to protect you.

Google and Facebook are on their way to a duopoly in online advertising. Over half of the revenue in that lucrative ($70B+) industry goes to them, and the two companies between them are capturing all of the growth (16% a year).

Apple and Microsoft have a duopoly in desktop operating systems. The balance is something like nine to one in favor of Windows, not counting the three or four people who use Linux on the desktop, all of whom are probably at this conference.

That is the state of the feudal Internet, leaving aside the court jester, Twitter, who plays an important but ancillary role as a kind of worldwide chat room. [1]

There is a difference between the giant Silicon Valley companies and Goldman Sachs, Citicorp and the big Wall Street banks. The Silicon Valley companies have created value. The Wall Street banks, by and large, have destroyed wealth.

I depend on Google; I found Ceglowski’s talk through Google Search. I use Apple products; I’m typing this post on my i-Mac. I don’t use Facebook or Windows, but many of my friends do. I try to avoid ordering books through Amazon, because I disapprove of the way Jeff Bezostreats Amazon employees and small book publishers, but I use subscribe to Amazon Prime.

I don’t deny the achievements of the founders of these companies, nor begrudge them wealth and honor. But I do not think that they or their successors have the right to rule over me, and that’s what their monopoly power gives them.

I’ve always bought Ford and General Motors cars, partly because I wanted to support jobs for my fellow Americans.

As Abraham Lincoln reportedly put it, “When I buy a shirt from England, I get a shirt and England gets a dollar. But when I buy a shirt from America, I get a shirt and America gets a dollar.”

At the same time, I’ve always bought Apple computer products, and, in so doing, I may have done more to undermine the U.S. economy than I did when I bought a Ford Escort or a GM Saturn.

I read an article yesterday on a blog called Moneyball Economics about how Apple offshored the American smartphone industry to South Korea, Taiwan and mainland China.

This is a big thing. The writer, Andrew Zatlin, pointed out that the United States imported nearly $100 billion worth of smartphones each year, half of them Apple iPphones. Smartphones are the third largest U.S. import, behind oil and automobiles.

He said it is like a Marshall Plan for these three countries. The iPhone industry creates a million jobs in eastern Asia and provides valuable technological knowledge that makes those countries more competitive in the world. They aren’t all Apple smartphones, but Apple has half the market and sets the pace.

I’d guess that if I interviewed a typical Silicon Valley CEO, he’d say he opposed labor unions because wages should be set by the law of supply and demand. This is conjecture, because I don’t know the views of individual CEOs, but I’d bet it was true.

I’d also bet that many of them buy into the view of certain economists that growing inequality in wages is due to the fact that the most talented workers command more of a premium over average workers than they did in an earlier era.

Be that as it may, Silicon Valley’s top companies – Apple Computer, Google, Abobe, Pixar, Intuit and Intel – are the targets of a class action lawsuit, and Hewlett-Packard in a separate suit, alleging that their CEOs conspired to limit the salaries of their most talented employees.

They allegedly agreed among themselves to refrain from recruiting each others’ employees, to share wage information and to punish companies that wouldn’t co-operate. All this is illegal, of course

Steve Jobs comes as close as anyone I know to being an Ayn Rand hero in real life. As depicted by Walter Isaacson in Steve Jobs, a semi-authorized biography, Jobs was utterly selfish and had no consideration of anyone or anything except his personal vision and obsessions. At the same time he was a genius who created a great company and transformed the personal computer, digital animation, the telephone, photography and much else.

Many Occupy Wall Street protestors, who hated most of the “1 percent”, nevertheless mourned the death of Steve Jobs because, unlike crooked Wall Street financiers, he actually accomplished something. Walter Isaacson wrote he was the most important American industrialist since Henry Ford and Thomas Edison.

I find it easy to mock those who, as Ann Richards, the former governor of Texas, once put it, were born on third base and thought they’d hit a triple. A great many of our so-called meritocracy contribute little or nothing or mainly harmful things to society. But it is more difficult to decide what I think a total egotist who accomplished great things.

This is nothing in Isaacson’s book to indicate that Steve Jobs ever read the works of Ayn Rand or gave a thought about her philosophy. His intellectual interests, such as they were, were in Zen Buddhism, New Age teaching and rock and roll.

Buddhism contributed to his keen aesthetic sense, based on simplicity and elegance. But he evidently did not take to heart the Buddhist teaching that the ego is an illusion and you should not make yourself unhappy if you don’t get your way. Quite the contrary.

Steve Jobs’ great talent was in industrial design. He brought art and technology together. As has often been pointed out, all the basic features of the Macintosh computer – the mouse, clickable icons and so on – were developed at Xerox’s Palo Alto Research Laboratory, and hijacked by Jobs. But it was Jobs, not Xerox management, who understood what to do with these concepts. The Macintosh was historic. Xerox’s own Star computer is forgotten.

As an artist, he was a perfectionist. He made big changes at the last minute rather than allow a flawed (in his eyes) product go on the market. I can easily imagine him, like Ayn Rand’s fictional architect Howard Roark, destroying something he created rather than let someone else spoil it.

He was not easy to work with. He had no patience with the merely adequate. He was quick to classify people as geniuses or bozos, based on hasty impressions. But at the same time he respected people who stood up to him—provided they proved to be right. He was a charismatic personality, famous for his “reality distortion field,” who was able to impose his ideas on other people almost in spite of themselves. His insistence on getting his own way drove his people to achieve more than they ever thought they could.

I use Apple products and I enjoy Pixar animation (which he did not create but fostered). At the same time I am glad that I never met Steve Jobs, and I do not recommend him as a role model. He treated those closest to him badly, including his loving and self-sacrificial foster parents, the mother of his first child and his loyal friend Steve Wozniak. He cared little for anyone he did not regard as a fellow genius. He did not practice nor believe in economic democracy. When a visitor asked about working conditions in Apple factories, his reaction was anger and contempt.

I’m glad Steve Jobs lived. I respect his achievement, and the passion that fueled his achievement. I would not subtract anything from his wealth or honors. At the same time I would not want to live in a society dominated by people like Steve Jobs or, worse still, people with Steve Jobs’ attitude toward life but not his talent. The world benefits from obsessive hard-driving geniuses, but that does not mean that ordinary people, who do an honest day’s work for an honest day’s pay, count for nothing.

Defenders of sweatshop conditions in China say that low wages are the result of the impersonal workers of a hypothetical free market. But a recent study (links are below) shows the real cause is the structure of the supply chain linking components producers such as Foxconn to customers such as Apple Computer.

When I hire a painter to paint my house, and he hires a helper, the free market works the way it ought to work because there is a rough equality of buying power. But no such equality exists when individual workers are dealing not just with corporations, but with networks of corporations.

The corporate supply chain represents a concentration of power and a diffusion of responsibility. When workers try to negotiate with Foxconn, managers can say that there is as limit to what they can do based on Apple’s requirements. But Apple managers have no direct responsibility. They can say there is a limit to what they can do based on their fiduciary responsibility to maximize return to stockholders.

You could say government should step in and set minimum wages and labor standards, but at the present time the governments of China and the USA are aligned with management, not workers. Governments will not heed workers until they organize and create a base of power that governments must heed. The workers of the world should unite.

Mike Daisey’s stage show about Apple Computer, to which I referred in a previous post, contained a lot of stuff that he just made up. Foxconn and other components suppliers in China apparently don’t employ child labor on a large scale, as he claimed, though other assertions about labor conditions are confirmed by independent sources. Some stories he told about encounters with Chinese workers apparently were invented.

Mike Daisey

All this came to light after the WBEZ radio in Chicago, the producers of This American Life, had second thoughts about a program they aired on Mike Daisey and distributed over Public Radio. They did their own investigation and issued a retraction. Then they did a whole new program about their mistake.

I give WBEZ credit. The managers took corrective action as soon as they realized there was a problem. They didn’t fire the whistleblower or try to cover up. This is a level of integrity which ought to be routine in large organizations, but isn’t.

Mike Daisey is not a reporter, but what he did is something that reporters often are tempted to do. They have a good news story, and reach for an extra embellishment that would make it an even better story, which discredits the whole thing.

The other thing to remember is that the problem isn’t just Apple Computer, but the whole system of outsourcing to China. If this controversy results in an improvement in Apple’s labor practices, this will be good. But if it merely results in shifting of business from Apple to other companies that are no better or possibly worse, nothing will be gained.

Apple Computer, Nike, Wal-Mart and many other companies depend on Asian sweatshops as suppliers—a sweatshop being defined as a factory with low pay and benefits, long working hours and child labor.

Some writers, including Nicholas Kristof, who reports from Asia and Africa for the New York Times, and Paul Krugman, winner of the Nobel Memorial Prize in Economics, say that in historic perspective, Asian sweatshops represent a step forward. As bad as conditions are in China or Cambodia, they are better than they were under Mao. As tough as it is to work in a Foxconn factory, many find it a lesser evil than rural poverty. As bad as it is to have a young child working 12 hours a day in a factory, it is better than being sold into prostitution, if that is the only alternative.

SF writer Bruce Sterling made this argument many years ago in an article in Wired magazine about megaprojects in China and elsewhere.

China has a very bad government. Nobody should fool themselves about this. It’s a profoundly corrupt one-party dictatorship based on a bankrupt, morally discredited ideology.

However, the current Chinese government is certainly the best government any living Chinese citizen has ever seen.

The 21st century is almost upon them now [this was written in 1998]: cologne, panty hose, Asian pop videos and maybe even a car. The Chinese people are definitely with this program. They know how much they have to lose.

Defenders of Asia sweatshops go on to say that there were sweatshops and child labor in the United States in the early days of industrialization, and, so they argue, this laid the foundation of the prosperity that we enjoy today.

The problem with this argument is that the sweatshop advocates are saying to the Chinese workers: Thus far and no further. Because conditions were even worse in the past, you can’t expect any improvement in the future.

U.S. companies such as Apple Computer, Nike and Wal-Mart are not just adapting to Chinese conditions. They are collaborating with the Chinese government is keeping conditions as they are. If Chinese workers had the freedom to bargain collectively, I would not tell them they were settling for too little. But you can’t claim to be an advocate for Chinese workers and at the same time deny them a voice.

What I would ask of Apple, Nike or Wal-Mart is that the company live up to its own professed standards. This would require two things:

Have labor standards audited by a truly independent organization, such as the Hong Kong-based Students and Scholars Against Corporate Misbehavior, and publish the results of these audits. There would be no need to set new standards. Let the auditors use existing corporate standards.

Cancel bonuses of an executive who subcontracts to a supplier that fails to meet the minimum labor standard. So long as executive compensation is based solely on financial criteria, and labor standards are merely aspirational, the latter will be ignored.

We the people could choose to buy only from companies that have independent audits and meet minimum labor standards. Shareholder activists could demand independent audits and labor standards. The U.S. Congress could finance independent auditors and impose taxes or penalties on imported products produced under inhuman conditions.

This would not mean the deindustrialization of China or other poor countries. It would be a lever to both protect American workers and improve conditions in those countries. It would not be a zero-sum game. Prosperous Chinese would be good potential customers.

Such leverage has been used to improve the quality of manufactured products. The ISO 9000 standards for assuring a quality manufacturing process spread outward from Germany to the European Union to the whole world. It should be possible to use similar techniques to inprove labor standards.

The strenuous efforts by the Chinese government and Chinese governments to suppress unions and blacklist malcontents, and the suicides among stressed-out workers at Foxconn, the big Chinese electronic components supplier, show that Chinese workers—some of them, at least—want something better than they have. We Americans should not be accomplices in holding them down.

Somebody named Tony Shin e-mailed me a link to an infographic about the abuse of Chinese sweatshop workers who make components for Apple Computer. It is well-done and accurate, and that is why I reproduce it below.

But I don’t want to single out Apple as if it were greatly different from the world’s other electronics companies or, indeed, any company that outsources to China. As I type this, I am wearing a shirt “Made in Cambodia”; I doubt the Cambodian workers enjoy better conditions than Foxconn workers in China.

Now the fact that other companies engage in bad practices doesn’t mean that Apple management is not responsible for their own company’s practices. What it does mean is that nothing is to be gained by boycotting Apple if it just means shifting to Microsoft or Sony or some other company that uses the same suppliers. In fact, if I were more cynical than I am, I would suspect that some of the campaign against Apple is being orchestrated by Apple’s competitors. [Added 3/15/12. Maybe I ought to be more cynical.]

As you look at the infographic below, keep in mind that what it depicts is more than the moral blindness of just one company. It is a whole system of production and distribution that encompasses many companies besides Apple and many nations besides China and the United States.

Foxcomm and other Chinese electronics suppliers force their workers to work under conditions so inhuman that Foxcomm requires its new hires to sign a no-suicide pledge. American, European and Japanese companies that hire these suppliers are well aware of these conditions, but do nothing. The late Steve Jobs demanded action in six weeks to produce a scratch-proof surface for the i-Phone, but procrastinated for years about doing anything about his own company’s reports on substandard working conditions.

Bill Black, associate professor of economics and law at the University of Missouri and an expert on white collar crime, gave a good rundown on the situation in this interview in the Real News Network. He points out that the Chinese suppliers violate their contractual obligations with their U.S. customers and their Chinese workers, and also violate Chinese law.

So it is not a question of imposing American standards on the Chinese. We have a right to hold the Chinese to their own standard, just as other countries have a right to hold us Americans to the standard of our laws and Constitution.

How could this be done? Congress could enact a law empowering the U.S. Commerce Department’s International Trade Administration to impose penalty tariffs on imports of products made under conditions that violate international labor standards and the domestic laws of the country of origin.

The U.S. government could adopt a policy of only purchasing electronics equipment, especially for the military, with U.S.-made components. This would be wise on national security grounds. If the U.S. has a military confrontation with China, we don’t want the Chinese to be in a position to cut off supplies vital to our military.

Labor and consumer organizations could recognize companies that obey the law and refrain from fraud, and we the people could patronize these companies.

Congress probably would have to revise or cancel the World Trade Treaty. The World Trade Organization authorizes punitive action against countries that engage in unfair trade practices, such as dumping products at prices below cost. But it has never, so far as I know, authorized action against unfair labor standards.

Globalization under these conditions could be a force for raising wages and improving working conditions around the world, rather than driving them down to the lowest possible level.

It’s not as if having suppliers pay decent wages would force Apple Computer and other electronics companies to go broke.

Last year President Barack Obama met with Apple CEO Steve Jobs and other Silicon Valley executives, and asked what it would take to have Apple’s iPhone manufactured in the United States. Jobs said nothing could bring iPhone manufacturing back to the U.S. The New York Times published a good article last month explaining why.

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight. A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the [Apple] executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. “The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Thomas Friedman wrote a column saying American workers have no future unless they can compete with that Chinese awesomeness. But I don’t know of any American workers who would get up at midnight for a 12-hour shift on a biscuit and cup of tea unless they were (1) slaves, (2) prisoners or (3) in the military, the latter of which was held up by President Obama in his State of the Union address as a role model for society.

Working conditions in China, in my opinion, are the result not so much of the invisible hand of competition as the iron fist of government suppression. Workers aren’t free to join unions and bargain collectively for better conditions. Complaining will get you blacklisted, and forming a union is against the law. The only way of protest open is the traditional Chinese option of threatening or committing suicide.

In the United States, labor unions in their heyday had work rules. They defined exactly what an individual worker could and couldn’t be required to do. In return many of the unions took on the responsibility of training apprentices in the skills that employers now say are lacking.

I remember working on newspapers in the days of hot type, when composing rooms were ruled by the International Typographers Union, one of the strongest and also most democratically run U.S. unions. One ITU rule was that nobody but a union member could touch type metal. The compositors and typesetters would all watch any newcomer out of the corner of their eyes, and if he let his hand fall idly on a tray of type, all work in the composing room would instantly stop. Good fun!

Like anything else, union work restrictions can be carried too far. But the alternative is unscheduled 12-hour shifts on subsistence wages, and a biscuit and a cup of tea.

I use Apple products. I don’t have any reason to think the late Steve Jobs or Apple Computer were or are worse than other Silicon Valley companies or executives, nor that electronics companies are worse in this respect than other kinds of companies. While I don’t think Jobs or Apple should be singled out, neither do I think “everybody does it” constitutes an excuse.

Foxconn, headquartered in Taiwan, is reported by Wikipedia to be the world’s largest manufacturer of electronic components, and the largest private employer in China. It employs an estimated 1 million Chinese workers, including 300,000 to 450,000 at its walled factory complex in Shenzen province. It is a subcontractor for Apple, Amazon, Intel, Cisco, Hewlett-Packard, Dell and Microsoft, Japan’s Nintendo and Sony, Korea’s Samsung and Finland’s Nokia.

Recently Foxconn has had so many suicides by stressed-out Chinese employees that it requires new hires to sign a no-suicide pledge. As England’s Daily Mail reported:

Factories making sought-after Apple iPads and iPhones in China are forcing staff to sign pledges not to commit suicide, an investigation has revealed.

At least 14 workers at Foxconn factories in China have killed themselves in the last 16 months as a result of horrendous working conditions.

Many more are believed to have either survived attempts or been stopped before trying at the Apple supplier’s plants in Chengdu or Shenzen.

After a spate of suicides last year, managers at the factories ordered new staff to sign pledges that they would not attempt to kill themselves, according to researchers.

And they were made to promise that if they did, their families would only seek the legal minimum in damages.

An investigation of the 500,000 workers by the Centre for Research on Multinational Companies and Students & Scholars Against Corporate Misbehavior (Sacom) found appalling conditions in the factories.

They claimed that:

# Excessive overtime was rife, despite a legal limit of 36 hours a month. One payslip showed a worker did 98 hours of overtime in one month … .

# During peak periods of demand for the iPad, workers were made to take only one day off in 13.

# Badly performing workers were humiliated in front of colleagues.

# Workers are banned from talking and are made to stand up for their 12-hour shifts. … …

Foxconn admits that it breaks overtime laws, but claims all the overtime is voluntary.

Some officials within the company even accused workers of committing suicide to secure large compensation payments for their families.

Anti-suicide nets were put up around the dormitory buildings on the advice of psychologists.